Navigant Research Blog

Coming to the Motor City: A Smarter Grid

— July 13, 2014

The smart grid in Detroit is about to get smarter – and so are utility industry executives exploring options for real-time grid data and analytics.  Distribution grid sensor developer Tollgrade Communications recently announced a $300,000 project to deploy its LightHouse sensors and predictive grid analytics solution across DTE Energy’s Detroit network.  The companies aim to demonstrate how outages can be prevented.

The 3-year program was selected as a Commitment to Action project by the Clinton Global Initiative (CGI) at the recent CGI event in Denver, where Tollgrade CEO Ed Kennedy took to the stage with former president Bill Clinton to discuss the project.  Tollgrade, Kennedy said, will make public quarterly reports on the project, beginning in 1Q 2015, identifying best practices and sharing detailed performance statistics.

Cheaper Than Building a Substation

With 2.1 million customers and 2,600 feeder circuits, DTE Energy has already begun piloting the system around Detroit, and Tollgrade says that it hopes to prevent 500,000 outage minutes over the next 3 years.  Because of the heavy concentration of auto manufacturing in the Detroit area, those saved minutes should translate into substantial economic benefits.  The system will leverage several communications protocols, including DTE’s advanced metering infrastructure communications network, reducing the startup cost and improving the return on investment.

The sensors will be placed along troublesome feeders as well as outside substations where older infrastructure increases the likelihood of outages.  Combined with the predictive analytics solution, the sensors cost just a few thousand dollars per location and could help DTE Energy avoid or defer replacing a million-dollar substation.  Both investors and regulators are sure to like those stats.

Predicting Change

Predictive grid analytics has been a hot topic in the industry for the last few years, but only recently have the prices of solutions and sensors fallen to a level where utilities can justify the cost to deploy them widely throughout the distribution network.  Navigant Research expects the market for distribution grid sensor equipment to grow from less than $400 million worldwide today to 4 times that amount by 2023.  (Detailed analysis of distribution grid sensors can be found in Navigant Research’s report, Asset Management and Condition Monitoring.)

Since its first meeting in 2011, CGI America participants have made more than 400 commitments valued at nearly $16 billion when fully funded and implemented.  The Modern Grid was one of 10 working groups this year; others include efforts in Sustainable Buildings and Infrastructure for Cities and States.

Another CGI Commitment to Action grant announced last week will fund a market-based, fixed-price funding program for solar and renewable technologies.  The Feed-Out Program from Demeter Power will support solar-powered carports with electric vehicle charging stations at a net-negative cost to the customer.  In other words, eligible businesses pay a fixed monthly fee to Demeter Power (lower than their previous monthly electricity bill) and their employees and customers enjoy free car charging while parked there.  Demeter will own and maintain the infrastructure.

The program will initially make financing available to commercial properties located in Northern California communities participating in the California FIRST property assessed clean energy (PACE) Program, which is offered through the California Statewide Community Development Authority.  Interested participants must register with Demeter Power Group to participate in the program, which is expected to launch in the first quarter of 2015.

 

To Win, Utilities Must Play Offense as well as Defense

— July 10, 2014

Since I’m originally from the Netherlands and spent several years living in Brazil, the semifinal results of this week’s World Cup soccer (or football, as we Europeans call it) matches have been disappointing, to say the least.  One thing that’s clear from the tournament ‑ one of the most exciting World Cups in my memory, by the way ‑ is that to succeed at this level, teams must play well on both ends of the field: offense and defense.  The Netherlands squad, the Orange, played superb defense on Argentinean superstar Lionel Messi, but failed to muster a goal in 120 minutes of regular and extra time and lost on penalty kicks.  As for Brazil, it played neither offense nor defense.

The same is true for utilities in today’s rapidly transforming power sector.  Playing defense – by sticking with established ways of operating and traditional forms of customer service – is no longer enough to succeed.  Utilities must also play offense; they must proactively develop new capabilities and innovative business models to thrive in a world of proliferating distributed energy resources (DER), greater customer choice, and rising competition from new players.

A Shifting Landscape

Widespread coal plant retirements, stiff renewable portfolio standards in many U.S. states, and the spread of renewable generation are all irrevocably changing the mix of generation assets while increasing the need for load balancing and frequency regulation on the grid.  Navigant forecasts that cumulative solar capacity in the United States will reach nearly 70,000 MW – 60% of it distributed – by the end of 2020.

At the same time, the U.S. Environmental Protection Agency’s (EPA’s) proposed limits on CO2 emissions from existing power plants will drive further changes in the generation landscape.  These limits will bring new natural gas capacity online, put upward pressure on wholesale electricity prices, and make demand response and energy efficiency programs key parts of the answer.

(Source: Navigant Consulting)

Today’s centralized, one-way power system is quickly evolving into an energy cloud in which DER support multiple inputs and users, energy and information flows two ways across the system, and market structures and transactions grow more complex.  The energy cloud is more flexible, dynamic, and resilient than the traditional power grid, but it also brings new challenges to a power sector that until recently has changed little in its fundamental structure for almost a century.

Lead or Lose

Facing declining revenue as customers consume less and produce more of their own power, utilities are faced with large investments to build new transmission capacity, upgrade distribution systems, and invest in new DER businesses.  Given these challenges, utilities must be adept at playing offense and defense.  An updated defensive strategy will entail:

  • Engaging with customers and regulators to understand customer choices vis-à-vis price and reliability
  • Improving customer service and grid reliability at the lowest prices possible
  • Finding equitable ways to charge net metering customers for transmission and distribution services
  • Developing utility-owned renewable assets to appeal to environmentally conscious customers

Playing offense is even more important.  Utilities must:

  • Create new revenue streams through the development of new business models, products, and services
  • Transform their organizations and culture in order to fully integrate sales, customer service, and operations
  • Upgrade the grid and operations to facilitate the integration of DER

These objectives can only be accomplished by implementing new business models that include developing, owning, and operating DER such as rooftop solar, customer-sited storage, and home energy management systems; providing third-party financing for DER; and offering new products and services focused on energy efficiency and demand response.

There is no going back to the old ways of doing business.  Utilities must lead – by playing both offense and defense – or they run the risk of being out of the competition.

 

Blackout-Plagued India Moves toward a Smarter Grid

— July 10, 2014

Utilities in India continue to take concrete steps toward upgrading to a smarter power grid that in the last few years has suffered massive blackouts.  Though the steps are not yet widespread, they show progress toward a more modern and stable grid.

Within a 2-week span, two utilities announced contract awards for new meters.  The largest announcement came when Bangalore Electricity Supply Company ordered 1.7 million digital smart meters from Landis+Gyr.  The meters are to be delivered over the next 12 months to Bangalore Electric, which provides power to the city of Bangalore and eight districts in the state of Karnataka, population 64 million.  The second recent announcement came when West Bengal State Electricity Distribution Company Limited ordered more than 1 million digital smart meters from Landis+Gyr.  Headquartered in Kolkata, the utility manages electricity distribution for 96% of the state of West Bengal, population 90.3 million.  West Bengal has been at the forefront of smart metering in India, having begun upgrading devices in 2009.  This deal follows an order for 1.5 million meters from Landis+Gyr, which were deployed last year.

Progress, Perhaps

In a separate deal, Essel Utilities will deploy an unusual retrofit meter solution.  The utility will install a module, made by local metering company Aquameas, that contains a radio unit from Cyan Holdings called the CyLec 865 MHz RF device.  A total of 5,000 of these units will be attached to existing meters.  The retrofit installations are to take place in the city of Muzaffarpur, in the state of Bihar, starting late in the fourth quarter of 2014.

Earlier moves made by Indian utilities and smart grid vendors indicate that the market is progressing.  Tata Power Delhi was the first utility in India to launch an automated demand response project with smart meters.  The project in the nation’s capital is for commercial and industrial customers that can take advantage of the latest technology.  Approximately 250 customers are involved, with the potential of helping shed loads totaling 20 MW.  Project partners include IBM, Honeywell, and Landis+Gyr.  Washington state-based meter provider Itron has made India a priority for its smart metering efforts, opening a lab last year to highlight its solutions for the Indian market, where it has also been active in supplying advanced water meters.

India still has a long way to go to reach its goals of a more modern electric grid that could eventually involve some 130 million meters.  But utilities are moving ahead with projects and pilots that could bring the country’s power grid closer to the 21st century.

 

Automakers Go for MPG Records

— July 10, 2014

Automakers have had some poor publicity recently, with safety recalls and financial penalties imposed for exaggerating fuel efficiency performance.  In the United States, Ford was forced to apologize and offer customers compensation when its vehicles did not deliver the promised number of miles per gallon.  Honda and Hyundai suffered a similar fate in 2012 in the United States, and Hyundai and Ssangyong have also recently incurred the wrath of legislators in their home country of South Korea.

Fuel economy has risen to the top of the list of factors that influence new car purchases, even in North America, where historically cheaper fuel has made miles per gallon a low priority for consumers, until recently.  Thus, many manufacturers have shifted their marketing emphasis from 0-to-60 miles per hour (mph) times to average miles per gallon (mpg) under standardized testing.

Taking the Long Way

The big problem with standardized tests is they don’t represent anyone’s actual driving, so the prospect of achieving the stated figures is unlikely.   Most people have bad driving habits (from a fuel economy perspective), such as hard acceleration and braking, driving with under-inflated tires, and carrying excess weight around without realizing that all of these factors affect how much fuel is used.   Others make it their life’s work to squeeze the most miles from a gallon of fuel, and there are competitions for those who want to be the best.

Mercedes periodically attempts long-distance driving feats with its production cars.  In July 2005, three standard Mercedes-Benz E 320 CDI cars drove from Laredo, Texas on the Mexican border to Tallahassee, Florida, covering 1,039 miles on a single tank (80 liters/21.1 gallons) of fuel.  This was part of Daimler’s introduction of diesel vehicles to the U.S. market.  In 2012, a Volkswagen Passat TDI made it 1,626 miles from Houston, Texas to Sterling, Virginia, again on a single tank of fuel.

Out of Africa

Now, a Mercedes-Benz E 300 BlueTEC HYBRID has driven the 1,223 miles from Tangier, in Northern Africa, to the United Kingdom in 27 hours, arriving at the Goodwood Festival of Speed with an estimated 100 miles of range still available.  The BlueTEC averaged 73.6 mpg on the journey.  This type of demonstration shows what can be accomplished in a production vehicle in driving conditions that included heavy rain, intense heat, rush hour traffic jams, and significant elevation changes.

This sort of feat is one of the biggest challenges facing electric vehicle sales.  Although few people would actually want to tackle a journey of over 1,000 miles on a single tank of fuel, many people are happy that their vehicles can do that, just in case.  And few would want to undertake such a journey where they have to stop every 100 miles to recharge for a couple of hours, even if there was a network of charging stations in place.

 

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